• Court calls on advisors to detail potential creditor payouts
• Wants Citgo data room reopened quickly to allow for new bids

HOUSTON, Nov 20 (Reuters) - The U.S. judge overseeing an auction of shares in a Citgo Petroleum parent to pay Venezuela-linked creditors on Wednesday proposed major procedural changes to advance a case stalled by wide opposition and lawsuits by creditors in other courts.

Judge Leonard Stark recommended a series of changes to encourage higher bids in a seven-year-long court case brought by companies pursuing up to $21.3 billion in claims for debt defaults and expropriations in Venezuela.

An up to $7.3 billion bid by an affiliate of activist investor Elliott Investment Management could soon be challenged by the court's recommendation to choose a "starting point bidder" to move forward with the auction. Parties in the case have objected to Elliott's offer, prompting the judge to develop the new terms.

A spokesperson for Elliott did not immediately reply to a request for comment.

Stark proposed to reopen a Citgo data room for potential bidders to prepare their offers, grant all parties in the case access to terms, offer termination protections to all possible bidders, and give enough time for competitors to raise bids.

The court said it wanted to continue with the revised sales process while creditors' lawsuits brought in other courts continue. Several had filed cases in New York and Texas seeking to improve their chances of obtaining proceeds from the auction.

The judge's filing rebuked advisors for cutting off access to information on Citgo's finances, and restricting details of Elliott's bid terms. He plans to hold a Dec. 13 hearing on his proposed changes.

Results thus far have not met the court's requirements and Stark asked creditors to help shape the terms needed to obtain the highest price for the shares. Advisors would also provide creditors with details on how they would share in the proceeds, he wrote.

Stark called for the advisors handling the auction to come up with a breakup fee and escrow for a finalist. After that selection, advisors should allow a period for rival bids, and deliver their recommendation after a long-enough period for submissions, he said.

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https://www.reuters.com/legal/us-judge-proposes-reorganize-stalled-citgo-share-auction-2024-11-20/